Life & Health Chapter 3 Test

Claim will be paid & coverage will remain in force

A Disability Income policyowner recently submitted a claim for a chronic neck problem that has now resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The neck injury was never disclosed to the insurer at the time of the application. How will the insurer handle this claim?

Payor Provision

A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?

Whole Life

A life insurance policy that provides policyowner with cash value along a level face amount is called....

Variable Life

A life policy with a death benefit that can fluctuate according to the performance of it's underlying investment portfolio is refereed to as....

20-Pay Life Accumulates cash value faster than Straight Life

A potential client age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay life accumulates cash value faster than Straight Life

A potential client, age 40, would like to purchase a Whole Life Policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

Does not guarantee a return on it's investment accounts

A variable insurance policy......

Paid-Up Additional Insurance

A young married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefit to protect against inflation, the teacher should select which of the following Dividend Options?

Face amount can be adjusted using policy dividends

All of these are characteristics of an Adjustable Life policy EXCEPT.....

The premiums can be lowered or raised, based on investment performance

All of these statements about Equity Indexed Life Insurance are correct EXCEPT.....

Insured must be eligible for Social Security disability for claim to be accepted

All of these statements about the Waiver of Premium provision are correct EXCEPT.....

Consideration Clause

An insurance company receives E's application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. Which of the following clauses details the conditions that E did NOT meet?

Additional Whole Life coverage at specified times

B owns a Whole life policy with a guaranteed insurability option that allows him to purchase, w/o evidence of insurability, stated amounts of....

Guaranteed Insurability Rider

B purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times w/o requiring to provide evidence of insurability. What kind of rider is this?

Level Term

D Needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

The full face amount

D was actively serving in the Marines when he was killed in an automobile accident while on leave. Hie $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

The Insured

G is involved in an automobile accident as a result of driving while intoxicated and suffers numerous injuries. According to the Intoxicants and Narcotics exclusion in G's policy, who is responsible for paying the medical bills?

10 years

G purchased a Family Income policy at age 40. The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?

Claims are denied under the Suicide clause of the policy

How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable Period?

When the state prohibits this by law

If an individual has an Accidental Death and Dismemberment policy and dies, an autopsy can be performed in all these situations EXCEPT....

After an insured has become totally disabled as defined in the policy

In insurance policies, a waiver of premium provision keeps the coverage in force w/o premium payments.....

Owner's Rights

Ina life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

Excluded by the insurer

Insurance benefits NOT covered due to an act of war are...

Reinstatement Provision

J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

$20,000 Death Benefit

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

Adjust the death benefit to a reduced amount

L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will...

45 Days

M's insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force?

30 pay life

N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?

Beneficiary will be paid the death benefit

P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?

Whole life policy with other insured rider

Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?

Return of Premium Rider

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

$50,000

S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?

Automatic Policy Loan

S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?

Beneficiary's Age

S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT....

$50,000

T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. 5 years later, T commits suicide. How much will the insurer pay?

10-Year Endowment

T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?

Expires at the end of the policy period

Term Insurance has which of the following characteristics?

The Initial Premium

The Consideration Clause in an insurance policy indicates that a policyowner's consideration consists of a completed application and....

Insuring Agreement

The agreement in an insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called.....

Amount of premium payments and when they are due

The consideration clause in an insurance contract contains what pertinent information?

Buy additional coverage at a later date

The guarantee of insurability option provides a long-term care policy the ability to....

Contest a claim during the contestable period

The incontestable clause allows an insurer to....

The cash value

The investment gains from a Universal Policy usually go toward....

Accidental Death and Dismemberment rider (AD&D)

The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called....

Premiums are waived if payor becomes disabled

What benefit does the Payor clause on a Juvenile Life policy provide?

Who the policyowner is and what rights the policyowner is entitled to

What does the ownership clause in a life insurance policy state?

Safeguard the insurer from an applicant who is contemplating suicide

What is the suicide provision designed to do?

Family Maintenance Policy

What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?

Family Maintenance Policy

What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?

Term Rider

What kind of life insurance product covers children under their parent's policy?

Flexible Premiums

What kind of special need would a policyowner require with an Adjustable Life insurance policy?

Whole Life

What type of insurance offers permanent life coverage with premiums that are payable for life?

Entire Contract

Which health policy clause stipulates that an insurance company must attach a copy of the application to the policy to ensure that it is part of the contract?

Policyowner controls where the investment will go and selects the amount of the premium payment

Which is true concerning a Variable Universal Life Policy?

Increase Face Amount

Which of the following actions require a policy owner to provide proof of insurability in an Adjustable Life policy?

Conversion Privilege

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance w/o providing evidence of insurability?

Insuring Clause

Which of the following insurance provisions specifies the benefits or services a policy will provide?

Entire Contract

Which of the following policy provisions states that the producer does NOT have the authority to change the policy or waive any of it's provisions?

Modified Whole Life

Which of these life products is NOT considered interest-sensitive?

Evidence of insurability is required when the option is exercised

Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?

Cash value may be borrowed against

Which statement about a Whole Life policy is correct?

Variable Universal Life

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age

J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the applications 5 years ago was found to be understated by 10 years. Which of the following actions will the insurance company take?

Modified Whole Life

K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?

Reinstatement

K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation?

Limited-Pay Life

Life Insurance that covers an insured's whole life with level premiums paid over a limited time is called....

Modified Whole Life

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for....

Through mutual funds, stocks, bonds

How does a typical Variable Life Policy investments account grow?

Age 100

How long does the coverage normally remain on a limited-pay life policy?

Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract

Which of these statements describe a Modified Endowment Contract (MEC)

Variable Life

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Entire Contract

Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?

Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered

Which statement regarding the Misstatement of Age provision is considered to be true?

Modified Endowment Contract (MEC)

Which type of policy is considered to be over-funded, as stated by IRS guidelines?

Policyowner

Who benefits in Investor-Originated Life insurance (IOLI) when the insured dies?

Exclusion

N is a student pilot with a large life insurance policy. Which of these features would limit the insurer's obligation in the event N was killed while flying as a student pilot?

Claim will be denied

P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim?

Accidental death or Dismemberment Provision

P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?

P will still receive declared dividends

P is the insured on a participating insurance policy. Which statement is true if P's premiums are waived due to a disability?

Premiums are waived after the insured has been totally disabled for a specified time period.

Which of these statements accurately describes the Waiver of Premium provision in an insurance policy?

Term Life

What type of life insurance gives the greatest amount of coverage for a limited period of time?

Universal Life

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Joint Life Policy

What type of life policy covers 2 lives and pays the face amount after the first one dies?

20 -Pay Life

What type of policy would offer 40-year old the quickest accumulation of cash value?

Entire Contract Provision

When an insurance company send a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called...

Change of Occupation Provision

When an insured changes to a more hazardous occupation, which disability policy provision allows an insurer to adjust policy benefits and rates?

Exclusion

When an insurer issues a policy that refuses to cover certain risks, this is referred to as.....

When the insured's dies or at the policy's maturity date, whichever happens first

When is the face amount of a Whole Life policy paid?

Upon death of the last insured

When is the face amount paid under a Joint Life and Survivor policy?

Void the policy only if it is discovered during the Contestable Period and proven to be material

When misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?

It provides a minimum guaranteed Death benefit

Which of the following statement about a Variable Whole life Policy is correct?

States the scope and limits of the coverage

Which of the following statements describes the purpose of the Insuring clause in n insurance policy?

Adjust the Premium payments

Which of the following statements describes what an Accident and Health policyowner may NOT do?

Must have a terminal illness to qualify

Which of the following statements is CORRECT about accelerated death benefits?

Collateral Assignment

Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?

Premiums are available for as long as there is insurance coverage in force

Which of these characteristics is consistent with a straight life policy?

Modify a provision in the insurance contract

Which of these is NOT considered to be a right given to a policyowner?

A fixed level premium

Which of these is an element of a Variable Life policy?

Term Rider

Which of these life insurance riders allows the applicant to have excess coverage